The Arkansas Department of Finance and Administration (Department) has issued revised income tax withholding instructions reflecting the reduction in the top marginal tax rate enacted under SB 549 earlier this year.

The supplemental withholding rate, which is the highest marginal tax rate, is changed from 4.9% to 4.7%.

The following updated withholding formula and tax tables are effective June 1, 2023:

• Withholding Tax Formula
• Withholding Tax Tables for Employers
• Withholding Tax Tables for Low Income

As previously reported (Tax Alert 2023-0779), on April 10, 2023, Arkansas Governor Sarah Huckabee Sanders signed into law SB 549, which, retroactive to January 1, 2023, lowers the top marginal personal income tax rate from 4.9% to 4.7%.

This is the second consecutive year that Arkansas has retroactively lowered the top marginal income tax rate.

Law lowers Form W-2 electronic filing threshold

On April 11, 2023, Governor Sanders signed into law SB 434, which, effective January 1, 2024, lowers the threshold for the requirement to file Arkansas Forms W-2 electronically from 250 employees to 125. The Department will waive the requirement to file electronically if the employer can show undue hardship.

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Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor

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